There is a lot of negative press about buying an extended warranty. True, a warranty is designed to not lose money for the warranty provider, but it is also designed to provide security for the holder of that plan. People buy insurance on their homes, cars, life and other things which secures them against a possible unforeseen large expense. In this regard, warranties should be viewed in a similar light.
Most of the arguments against discuss the cost of repairs not outweighing the risk of a problem happening which again, goes against why we buy insurance. The decision to buy or not to buy a warranty should be based on the following:
1. Price point. Warranties are not all priced the same and can vary among sellers. Third party providers often provide a lower priced option outside of the store. Many of these companies don’t have the overhead a retail store does. If a warranty is cheap enough that can outweigh the risks alone. But, make sure you buy from a reputable seller as not all are legitimate offerings.
2. Convenience. If a repair is required and you are not covered, imagine how you would arrange a repair. What’s involved? How do you find a trusted repairman? How do you even compare this and or prices? How busy are you and do you have time to do all that? Having warranty coverage will eliminate all of the above. Warranty providers already know who the best repair people are and will take care of the payment so the customer does not have to worry. Servicers are required to meet performance guidelines or risk not getting the business, so you know you’ll get a quality repair.
3. Product. The product you are covering can help you decide what you want to cover. Things you can’t live without often are a good choice. Cell phones, tablets or lap tops that are high value goods that tend to easily break are one. How about large appliances with expensive electronics you don’t want to move. Specialized products that last could also be considered worthy, but really it is up to the user. If you can’t afford to buy a replacement or want to be stuck with the hassle, then you should buy a warranty.
4. Underwriting. If a retailer goes out of business, the protection plan still covers the customer. This applies only when a plan is supported by another trusted underwriter other than the retailer. Again not all underwriters are legitimate.
A properly priced warranty provides cushion for the health of the plan but does not gouge. If plans are priced too high, they get adjusted downwards to make it fair for everyone. Online warranty companies can afford to charge less because they don’t have a much overhead to deal with as retailers do. Buying an extended warranty does make sense if you know what to look for.